Small organizations usually have little paperwork involved with the buying operation. In part, that is because in the beginning they usually don’t even have a formal purchasing department. Either the president, or others involved in the organization do some of the buying. They may not even use a P.O. form. Consequently, prices paid are relatively high, quality problems are widespread, deliveries are late, and service is poor.

Eventually it is realized that the situation should not continue and someone is given the responsibility for setting up a purchasing department. Purchase order forms and requisition forms are designed and used. Receiving and inspection forms are created. As the company expands, so do the files. Soon it is realized that the paperwork jungle is driving up costs without adding the needed control. Drastic measures are suggested to eliminate much of the paperwork. Some managers suggest eliminating the purchasing department and establishing extreme decentralization where everybody buys what they need.

A better answer is to automate much of the purchasing operation by using a computer network or upgrading the computer operation with better software.

To achieve efficiency organizations need to build a database of approved suppliers, price histories, and supplier performance records. Computer generated requisitions and purchase orders eliminate the need for many multiple copies. Computer records eliminate the need for manual filing. They make it easier to retrieve records and data. Authorized employees can enter their requirements into the network. Buyers then convert these requirements into purchase orders and electronically send them to selected suppliers.

The database provides the necessary information to negotiate blanket orders and systems contracts so that one purchase order covers multiple purchases over six months to a year. Each order covers a wide range of items.

Other ways of reducing paperwork include setting up a special time for reordering office supplies and non-emergency supplies on a weekly basis rather than whenever someone gets the urge to order.

Limiting the number of suppliers reduces the number of orders while building the ability to negotiate volume purchases. Standardizing products rather than allowing everyone to buy any brand they want reduces the number of orders while reducing the amount of needed inventory.